Concerned about rising household debt, Ottawa is making it a bit tougher to get a mortgage on your home. And that's a good thing.

Canadians' personal debt load has risen to dizzying levels. For every dollar we earn, we owe a record $1.52. That includes credit card balances, auto loans and leases, lines of credit and — most notably — the mortgages on our homes. With a recession just behind us and darkening economic clouds in Europe, it is wise for Ottawa to try and tame the debt monster by toughening regulations on new mortgages.

Officials in the Finance Department, along with many other economists, understand that too much household debt may crowd out consumption and eventually threaten even the tentative growth that Canada's economy has managed to muster. And more urgently, they see clear signs that at least parts of the housing market — step forward, Toronto — are spiralling into unsustainable territory.

As a result, Ottawa is rightly moving once again to cool things off. Finance Minister Jim Flaherty is taking sound measures such as reducing the maximum amortization period of new mortgages to 25 years from 30 years and lowering the amount of equity that can be borrowed against a property to 80 per cent from 85 per cent. These moves are intended to help Canadians more quickly pay off their loans and discourage those on the margins from overextending themselves with too much debt.

These are relatively cautious steps. If Ottawa wanted to be more aggressive it would put an even lower cap on refinancing levels and bump up the minimum downpayment (now just 5 per cent) required for mortgages. Alone, the new measures are not likely to radically cool down the overheated housing market in such places as Toronto. But by tightening the terms of mortgage borrowing, especially in this prolonged period of low interest rates and easy money, the government hopes to slow the growth of risky debt held by too many Canadians.

Some people who want to get into the housing market will find it more difficult once the new rules are introduced on July 9. Some will have to settle for less house than they want. But that's as it should be. When they are in a stronger financial position to buy they will rest easier knowing the roof over their head is more secure.

More on thestar.com

We value respectful and thoughtful discussion. Readers are encouraged to flag comments that fail to meet the standards outlined in our
Community Code of Conduct.
For further information, including our legal guidelines, please see our full website
Terms and Conditions.